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Two schools had been told by the Charities Commission that they were not doing enough

Independent schools have won a long-running legal battle with the Charity Commission on what schools must do to justify their charitable status.

The Independent Schools Council says it is delighted by a ruling concerning private schools and other charities in England and Wales.

The Charity Commission has been told to rewrite part of its guidelines.

But it is pleased the judges confirmed that schools should make more than a token effort to help the poor.

Most private schools are charities and the status brings tax benefits.

Under new rules, brought in in 2006, private schools had to prove their wider public benefit to keep their charitable status. They could not be called charities just because of the public benefit of giving an education to the children going there.

The ISC, representing 1,260 schools, argued at the tribunal at the High Court in London that the Charity Commission's guidance placed too much emphasis on the extent to which independent schools offered bursaries to poor children.

In its ruling, the tribunal confirmed that private schools, as educational charities, have to demonstrate a wider public benefit, beyond that to their own pupils. And it confirmed that charities have to provide "more than a token benefit" to the poor.

The ruling liberates schools to innovate and be creative in their charitable provisionMatthew Burgess, ISC's general counsel

But it concluded that "certain parts of the Charity Commission's guidance were erroneous" and should be rewritten.

In short, it suggests that the trustees of a charity should be able to have more say about how it meets its obligations to be of benefit to the general public, within a framework set by law.

The ruling says: "It is for the charity trustees of the school concerned to address and assess how their obligations might best be fulfilled in the context of their own particular circumstances.

"Not all of the benefits which the school provides to those other than students paying full fees need to be for the poor. We see no reason why the provision of scholarships or bursaries to students who can pay some, but not all, of the fees should not be seen as for the public benefit.

"Provided that the operation of the school is seen overall as being for the public benefit, with an appropriate level of benefit for the poor, a subsidy to the not-so-well-off is to be taken account of in the public benefit."

'Landmark ruling'

The Charity Commission disputes the ISC's claim of victory and regards the ruling as "a draw".

It said the tribunal had agreed with its interpretation of the law on the key issues - particularly that a charity which expressly excluded the poor from benefit could not be a charity and that charities must operate for the wider public benefit, not just offer a token benefit to the poor.

The commission said the ruling was an important clarification of what charitable independent schools must do for the poor.

And in a statement it added: "We accept of course the tribunal's conclusion that some parts of our guidance do not explain the law clearly enough.

"We will amend the relevant parts of our public benefit guidance in the light of the tribunal's decision, a process we have already begun."

Matthew Burgess, ISC's general counsel, said: "Today's ruling takes public benefit decisions away from the commission and hands them back to school governors, and for that reason we warmly welcome it.

"The ruling liberates schools to innovate and be creative in their charitable provision. The commission' s former approach, now discredited by the tribunal, had the effect of reducing the public benefit of independent schools to a crude calculation of fees and bursaries."

The National Council for Voluntary Organisations (NCVO) described the ruling as "the most significant development in charity law for nearly 50 years".

It said it was important because it confirmed that to be a charity, a body should have to demonstrate it is providing a general benefit to the public, not just one to those who can afford to pay.

'Unclear'

Solictor Paul Ridge, from Bindmans law firm, represented a group of academics and educationalists at the tribunal.

He says the judgement will mean that many schools will need to "look again" at their approach.

He added: "The difficulty with the decision is that the court will not draw a firm line as to what a school should and should not do. The court points out that one per cent of funds allocated for poor pupils would simply not be sufficient. It suggests that 10 per cent would be enough. Where the line is to be drawn remains unclear."

It is understood that following today's ruling, there needs to be an agreement from both parties on how the guidance is changed.

If an agreement is not reached, there could be another court hearing to decide if the parts of the guidance challenged by the ISC should be quashed and rewritten, or amended.